Embodiments of the present invention relate to classification of transactions, and in particular, to systems and methods employing multivariate transaction classification.
Unless otherwise indicated herein, the approaches described in this section are not prior art to the claims in this application and are not admitted to be prior art by inclusion in this section.
Classification is the process of assigning a classification code in one or more taxonomies to a transaction. One example of a taxonomy is the United Nations Standard
Products and Services Code (UNSPSC). Such a taxonomy may also provide a framework for categorizing spending within an organization and performing analytics thereon.
The classification process may involve organizing transactions (such as invoices and purchase orders) by business dimensions and their hierarchy, in order to ensure a consistent and complete understanding of purchasing activity. This provides responsible parties (e.g. sourcing managers, Chief Procurement Officers) with visibility and accurate answers to questions regarding organizational spending.
Lack of a uniform classification structure defined across all procurement, financial transaction systems and other business data can interfere with effective analysis of category spending over the enterprise as a whole. Conventionally, organizations may address this issue through use of a ‘single variable’ approach for specific domains and their classification. An example of such an approach is exclusive use of an item description for spend classification.
Such single variable approaches are simple, but may lead to inaccuracy. For example, exclusive reliance upon item description for spending classification tend to cover direct spend but may miss leverage because of omission of item descriptions in indirect spending.
Similarly, basing classification solely upon the general ledger (G/L) account may result in a bias toward ‘why’ something was purchased, instead of ‘what’ was actually purchased. Lastly, classification by supplier only may result in an oversimplification because suppliers tend to sell more than one thing. As a result, alternative leverage such as consolidated shipping and services may remain unseen and unleveraged.
Accordingly, the present disclosure addresses these and other issues with systems and methods employing multivariate classification of transactions.